As the citizens and small businesses continue to face the 'cash crisis' triggered by the overnight demonetisation of 500 and 1000 bills, the move announced by the Prime Minister Narendra Modi raise concerns about its effectiveness to curb the black money circulation in the economy.
Eminent economist and former Union Minister, Yoginder K Alagh strongly criticized the idea of curbing the black money circulation by demonetising two of the most widely-circulated currencies in the country.
"With this measure, the stock of black money -- to the extent it is kept in cash -- will be unearthed. The Government needs to tell us how the flow will be reduced with the new currency. Even with this decision, the demand and supply of black money hasn't changed. Only the currency has changed," Alagh said.
"The people indulged into black economy will start doing it again. We should have policies to stop generation of black money," he said adding that the move comes at the cost of the confidence of the common man in the Indian currency.
"At one stroke, they have created a lack of confidence in the Indian currency. As a traditional culture of Indian society, the larger notes like 500 and 1000 were seen as something to be kept as the most liquid assets -- a note that can be predated upon. This feeling has gone," Alagh said.
Terming the move as a blow to the political parties Alagh however pointed out that the ruling party is stand to benefit as against those out of power.
The report has been modified with changes in Mr Alagh's quotes.